Hot Doc Sale Bonanza, Corporate Travel Management Survives for Now, Albo Kinda cuts Business Class, Why Consumer Businesses Shouldn’t Shut during Christmas and Busiest Airline Routes

25:01All right. Well, that's a disaster. I'm bad enough at this with sites in the West, let alone going for Chinese ones. Well, even though Amazon's split, I'm still going to say that the number one e-commerce site in the world is Amazon US. Is that right? Yeah, absolutely right. by a pretty decent margin. So I want to quit this quiz now. Can you guess monthly visits or do you want me to give you the monthly visits so you can anchor off Amazon's monthly visits? Yes, give me the monthly visits and I'll anchor off. So Amazon's US monthly visits, 2.7 billion. Billion? Billion. Oh my God. So that is roughly eight visits per American per month, including the newborn, including a newborn American in that group.

25:42As an aside, I looked at my Amazon account out for something for something i bought about 50 things on amazon this year so i've clearly been there a lot yeah i would have been the same i'll be the same i mean my daughter is buying stuff on amazon i i would say weekly but it might be it might be more than four times a month to be honest so yeah i mean because they just make it so easy right and they're prepared to lose money on the little purchases to get you to make the big purchases and so that you know they they would not be closed on Christmas Day if they had physical retail. All right, so they're number one.

26:16Number two, am I staying in America for number two? You are not. You're actually going outside America for the next one, for the next two or outside America. I'm going to have to go with China. I'm very bad with these Chinese sites. That's pretty good. You got the country right, which is a big win. Well, there's one and a half billion people. It's probably going to be odds on to be them. is Alibaba the biggest Chinese e-commerce site? No, it's well behind number two. Is like the world of WeChat, I don't really know if that's e-commerce or not. It's not Tencent. Okay, Tencent, no, okay. Like Shein couldn't have risen that quickly.

26:55I think that's not Chinese focused anyway. That's internationally focused. Where are they meant to be out of? Singapore or something. Where do they say they're out of? Singapore. You're missing the, I thought this was actually a pretty obvious one. I'm missing it because I just had a mental blank on the name of it. That's why. It's a clue. It's 1.6 billion. So it's not that far behind Amazon, to be honest. Is it the one Yahoo? What did Yahoo own? Yahoo was Alibaba. Oh, that's Alibaba. You're going to say this and I'm going to be like, how the hell did I not say this? Say it. Timu. Timu. Oh, well, I wouldn't have said that.

27:23So I didn't know that Timu was China focused. Sorry. This isn't views from China. This is views. Amazon.com US will be views from the US because it's.com. It could also have some people who went to the.com. But Temu gets global views. All right. All right. All right. So there are country-specific ones, but they're the specific URLs, for example,.co.uk. All right. So this is why Amazon is terrified about Temu, because all those Temu purchases presumably are predominantly coming from outside China, would be my guess. I don't know. That's a lot of visits. And I would say in the West, what, none of those visits existed five years ago, basically?

28:01Yeah, I agree with that. And so this is all that's predominantly, if Amazon is so dominant, what that means is that the majority of visits to Timo are visits taken away from Amazon. That's unless you believe in incremental purchasing, which some of it will be true, but not much. Oh, some from Ali. I think a chunk from Ali as well, because they're probably more like Ali than maybe Amazon, but it certainly doesn't help Amazon. And so you said that Tencent is far down and Ali Baba is far down. So just to compare, so Amazon.com, 2.7 billion. Timu, 1.6. AliExpress, 646 in third. Okay. Oh, they're third.

28:36Okay. All right. Who do you think? Fourth place surprised me. Like fourth, if you can get fourth, fifth, sixth, and seventh, fourth, fifth, and sixth. I can't even get number two. How am I going to do that? Yeah. And I gave you the country. So yeah, I think we're a little hopey up. But have a crack. Did you say this is China as well? Or you said we're back in the US? No, we're out of China. No, China only had two and we're done with China. Amazon UK? Amazon UK is back down number 12 with 370 million. So it's well behind. It's about half of what number four is. So the biggest countries, like this is how I think about it.

29:08You've got the US, that's the biggest economy. China is the second biggest economy. And so then now you start thinking, what's the third biggest economy? And so you're thinking about things like Japan, Germany, those types of countries. I don't know what would be popular in Japan. Do I know? Is it a Japanese one? You know pretty much all these businesses. You've heard of all of them. Like it's not Amazon.de. I don't know how big Amazon is in Deutschland. Amazon.de is number 10 with 407 million. So it's definitely up there. So still way down the list though. But I'm talking number four now. And don't forget, this could be back to countries I've talked about, like the US for example.

29:48Walmart? Walmart is number eight. If this was family feud, I would be doing well in this quiz. Because you know family feud, you can do any order, right? As long as this on the survey says. It's actually number seven. Walmart's definitely up there and probably growing better than most. So you're not miles off there, actually. It's pretty good. But there's one ahead of Walmart. There's a couple ahead of Walmart that you've definitely heard. One, the 100 % you've heard of. Could we call it the forgotten man of e-commerce? eBay. eBay, which is number four with 635 million. Number five is Russian, I think.

30:23ozon at 520 never heard of that i think it's russian uh number six you've mentioned amazon japan is that the main e-commerce site in japan amazon japan is i find that astonishing there's another two in japan that are on this list and it's the same business do you know what that business would be if you add it up is ahead of amazon japan uh is it owned by softbank i don't think it's owned by softbank i don't think i know what the japanese business e-commerce businesses Rakuten. Oh, I do know that business. Yes, I do know that business. Rakuten collected a whole range of different e-commerce assets from around the world, almost universally junk.

31:00Like they're this great Japanese e-commerce business and they went on a spending spree of junk. Treat Well in the UK, which is like a book well fresher business, like a beauty book, and it's been a bit of a disaster. It's still going, but it's been a bit of a disaster for them, I think. They bought comparison businesses. They bought cashback businesses. They just bought junk, basically. So there's the Indian businesses. There's Amazon, India at$4.35. And then the Flipkart, which is about a third of the size. Yeah, Mercado, Libre. So the thing about India that people don't realize often with e-commerce is India is not a very internet-connected country relative to its population.

31:35And so whilst they've got this enormous population, a lot of people are actually not buying online on a regular basis. China's quite different to that. And that is why India, with its enormous population, is just consistently underrepresented on all lists of countries for economic-related activity. And my hope is that they climb up those lists. But if you've been to India, you can see some of the challenges in India climbing up that list, basically. We found that out the hard way. We launched India as our first global – New Zealand aside as our first global business in probably 2016. And it was really difficult.

32:08The point was we still have an operator. We still sell there, but we don't really have anybody on the ground. there that we have a finance team there but and some support but our indian team we wound back it's just we had a great team great bunch of people but it was just a really hard market uh you can't sell over the phone there's a yeah it's a whole bunch of strange laws they um and what was the final nail in the coffin for us is they basically um announced this bizarre hotel tax if you sold a hotel to an indian person the hotel was offshore you pay this huge you're going to charge this huge amount, basically all our margin.

32:42So we said, okay, we can't. And they eventually didn't go through with it. We said, we can't operate in a country with this much sovereign risk where they can just chuck this random tax that kills your business overnight with no reason or rhyme or reason for it. Definitely culturally, it's very different to the West. Like I love the, like, I don't want to say I love the culture. There's parts of it I don't love. Like the waiting is not loved by me, but there's parts of the culture I really, really love about India, but it is very, very different. and you know you can ask cam mcintyre when next time you talk to him about realestate.com.au what his plans for that indian business because you know like it's a minuscule thimble size business relative to rea in australia with a population that is you know like 30 40 times the size of australia more like 60 almost 50 or 60 times the size of australia pretty soon so like i think um yeah india is an unusual business and an unusual market for business and e-commerce is not anything like it is in China and India.

33:39Yeah. And as we learned the hard way, I was chatting to Michael Miller actually a couple of weeks ago and he was more bullish on the Indian business, to be honest. He's obviously on the REA board, runs News Corp here. I think it's going okay. It is a growth business for REA, you remember? I mean, we talked about it. It is like the only international business they could actually get to grow, right? It's just tiny. Can I give you one more quick quiz while I've got you in the quiz mood? Because it's a great time of year for quizzes. That's super quick. You can. Most movie tickets sold in the US by number of tickets.

34:08So this basically is a way to work out the most popular movies without having that inflation adjusted thing, which is never quite right because everybody underestimates how much inflation there was. Oh, I see. So the most popular movie by ticket sales in history. I'm trying to think about a quiz I would be less, more ill-prepared to answer and less able to answer off the cuff. Maybe if you ask me about celebrities, like I was going to say makeup, but I might actually do better on a makeup quiz for skincare. I know a bit about skincare. What else would I be this terrible at about? I mean, it's hard to think of much that I'd be this.

34:42Fashion, maybe? Well, you definitely know some of these movies are pretty obvious. Some are a bit tricky. That's great. I'm going to say them and they're not going to be in order and you're going to say, are they in the top 10? Okay? Yeah. Okay. I'll give you top 10. We'll pass. Star Wars, the original. Well, you downplayed yourself and you've come real hard. That was number two, A New Hope. All right. For someone who was so dismissive of their own ability, you've nailed it the first one. I don't think Mike could have done better than that. I'm just trying to think of the most popular movies that I can think of.

35:12We're a bit anchored to how much cash you make, which is relevant, but there's a lot of older movies in here. No, I'm going to go for old stuff. I'm going to go for classics after this, but like Avatar, is that there? Avatar's not there, surprisingly. That shows you how much box office revenue is not correlated with this quiz. Yeah, neither Avatar is on there actually. And by the way, that's more of an indictment that it even sounds because you're not saying what percentage of the movie going public bought tickets. The population at the time of Avatar is significantly higher than it was at the time of Star Wars and presumably on the movies before that.

35:52And so movies like the ones that we know as classics, like Casablanca, was that big at the box office or not? I think it was decent. That was during the war that it was released. I don't know. Yeah, I think that was pretty successful. I'm just going to go for a lot of these mega movies, I guess, and hope that lots of people went to see them. Like Superman, like the Christopher Reeves Superman? Yes, number five. I think what's happened with a lot of these movies is, and Star Wars is a classic example, people saw Star Wars two, three, four, five times. because Star Wars sold 178 million tickets in 77.

36:25There was only probably that many people in the States at the time. So I think the difference is back then people, there was a longer release window. So I think Star Wars was out for a year. So people saw it multiple times versus now the release window is like a month. No streaming. Yeah, it doesn't go streaming in a month. Streaming back then like this. And like when you look at number one, if it wasn't me that you were talking to, if it was just a regular human being that actually consumed entertainment, would you be like you total moron how can you not know number one or is it confused oh it's nuts it's like you go oh of course but i wouldn't have got number one are they all are any of them comedies i didn't think so so you know that you know they basically don't make comedies anymore i don't know if you've noticed that but like they don't make comedies anymore because not enough people go and see them they put them on streaming yeah and but they don't really put them in the cinema anymore.

37:17And so there's a Jurassic Park? Nope. Think a bit older. There's only one movie I'd say that is recent era. And even that wasn't that new. It was new-ish actually. Once in the last 10 years. I don't know how many people went to the movies. Like really old, like what was that? Sunset Boulevard kind of movie? No, but most of them are in the sort of World War II to Vietnam War era. Oh, really? Ben-Hur. No. It was not bigger than Ben-Hur. I don't like this quiz. Tell me another one. Number one, Gone with the Wind, 203 million, which means significantly more than the population. I gave up on – I was going to go through 100 classics, but I didn't know which classic was going to be on there.

37:57I was just going to reel through them. They're quite classical. Then two Star Wars, three Sound of Music, four – I'll give you a clue with four – Steven Spielberg. Well, that's not a clue. How's that a clue? Well, you directed it, and it was the number one movie, I think, at the time. E.T. That was my guess. Yes. E.T. Okay. Yep. Number six, Ten Commandments. Number seven, another Steven Spielberg movie. Close Encounters of the Third Kind? No. That wasn't that big. Epic, known for its great soundtrack. I don't know. Jaws. Then you've got Dr. Zhivago, The Exorcist, Snow White, and number 11, there's 11 for some reason on here, is Star Wars Force Awakens.

38:37It's really the only sort of modern movie on there. That was the only one after 2000. I was going to say, is that the only Star Wars one? Do you not find it bizarre that Star Wars is number two, but Return of the Jedi, not Return of the Jedi, what's the second one? Empire Strikes Back. Empire Strikes Back. That question, by the way, is going to just make people have dramatically diminished their opinion of me. Not many people, but some people now will think, oh, I've lost all respect for that guy. Or maybe that will increase their opinion of you. By not knowing the second Star Wars movie. I mean, like I've known it for my whole life and just in this moment, I forgot the name of that second movie.

39:15Anyway, how can Empire Strikes Back not be on the list if Star Wars is number two? I think Empire Strikes Back was a lot smaller than Star Wars, revenue-wise from memory. There was a fair gap. And Star Wars - Did people not think it was good? I think Star Wars New Hope, you don't get many movies that are out at the cinema for a year. That was pretty incredible. That just captured the zeitgeist on what was a relatively low-budget movie. And Star Wars number 11, what was that? the force awakens force awakens yeah is that like one of the numbers in the movie series or not i think it was the or is it a spin-off was it number seven i think i think i think it was episode seven wasn't it right it's bizarre that that one suddenly pops up again isn't it or not yeah well the last three star wars were huge at the box office were they okay yeah massive when i saw number one yeah Yeah, it dropped off.

40:07Which ones did they do? Four, five, six, right? Number one was Jar Jar Binks, yeah. Number one was 1998, 1999. Once I saw that, I was like, well, that's it for me on Star Wars. I'm done. It was such a shame because the first three was so, as in episodes four, five, six were so good, and then it really fell away. That's a classic example of a character that should have died at the very beginning of a movie, and that whole movie would have been a lot better with him dead early. Taking out the first three, as in four, five, six Star Wars, I think, did you watch Andor? last couple of years that it was on Disney.

40:38I watched The Mandalorian. Yeah, I didn't love The Mandalorian. I watched that. Andor is - That was basically a Western, right? That's just a Western set in space. Well, when George Lucas made Star Wars New Home, he effectively set it as a spaghetti Western based in space. That was his intention. Right. But I thought Andor was incredible. That was, since the first three Star Wars, as in episodes four, five, six, that was by far the best. It was, it just captured that. Is that streaming? Is that on streaming? Yeah, it's worth watching. It's on Disney. It's worth watching. There's two great series.

41:06It's excellent. And I don't like any other Star Wars stuff. Do you think there's ever going to be a movie that gets on this list again in the next 15 years given streaming? I don't think so. I think it's – yeah, I think it's gone. Because there's too many other things to do. Like there wasn't – this is going to sound ridiculous, but like in the 50s there wasn't that much to do entertainment-wise. So you got the washing machine. I'm not being facetious in saying what I'm saying here, by the way. You got the washing machine and you got some other household appliances. And then you said, well, what the hell am I going to do with my time?

41:38Definitely women said that, right? And because their whole lives were just totally consumed by housework before all of these household technology was developed. And there was not that much to do. There was a lot of free time that appeared in the post-war period and not that many things to do. And TV was not good at that time. like it was pretty bad and you had the radio and i don't know what else like rolling a hoop down the street or something right so like so i think like the the movies would have been a great great great source of entertainment i mean they had all those live cabaret shows and stuff it was like such a different era of entertainment i know we'll go super quick break got some great stories coming up after the break

42:37and we're back and the prime minister announced last week that he's going to finally force families of politicians to fly economy class rather than business class and limit the use of entitlements to flying to and from canberra or the local mps area can i just say those two when this happened, I posted three changes on LinkedIn that had to happen to make this reasonable with community standards. One, economy travel. Tick. Two, you can only use it to and from Canberra. Tick. The third one, he didn't do. I thought the third one was really important. The third one is, if you have any business to do in Canberra, you cannot use the taxpayer fare.

43:19So, you know, which is the Greens woman whose husband is a lobbyist? Sarah Hansen Young. He should never be allowed to use taxpayer-funded tickets. He's a lobbyist. His workplace is Parliament House. So he didn't have the guts to do that last one. The business ones is completely outrageous. Why are they flying$500,$600,$700 tickets for someone who's not even with the MP at the time? You can sort of understand MPs flying business. I don't love it, but you can sort of understand the MPs flying their flying business. but why is someone who's not even with the MP fly? It's just, that's completely outrageous if that was ever allowed.

43:55I'm not sure all MPs should fly business, by the way. It's not all people in a company fly business. The people at the top of the company fly business. And so maybe ministers and shadow ministers fly business. Why is everyone flying business? Certainly not the partners. So they got the partner of a backbencher flying business historically. Look, what a joke. The kid of a backbencher. Yeah. Albo indicated that consideration should be given to new mothers and fathers and to children who are essentially dependents as well to make sure they don't disadvantage parents. I'm not quite sure how this is even relevant.

44:29Well, none of those tickets are being used by those people, virtually none, right? I read a long article about this before. The thing is that Bondi, that totally overshadowed this catastrophe for the government and created a much bigger genuine catastrophe that was also a catastrophe for the government. But with this, you know, there was this whole expose in the Australian, I think it was, which is the people that use these are the people with adult kids. Of course. Not with young kids. And the people with young kids, like they're not the ones predominantly using this or using it at all. And the heaviest user of it was someone who flew their wife, like for every parliamentary sitting.

45:08But this was a member from like some country place, right? And he just wanted to maintain the relationship. is like, I'm actually all right with that. Like, all right, maybe it shouldn't be a business class, but I don't mind. Like, I'm actually okay with flying your wife or husband or partner or whatever it is in every sitting period. If they want to be in Canberra with you, that's exact, because God knows why the hell the capital is Canberra. Nobody wants to be forced to be in Canberra. And if you want to live there, that's fine. It's up to you. I'm not sure every, I think it should be, I think it should be a cash limit.

45:40I think you should say you've got 10 grand or whatever it is in costs and you can spend it however you like. If you want to spend on 10 business class tickets, that's fine. If you want to spend it on 40 economy tickets, that's fine. If you want to go overseas, I think everyone should get a certain amount, maybe based on level. That's such a better way to do it. Well, what they should say is you got 5K on Qantas and 5K on Virgin. That's what they should say. Spread it around. Or even if you said you've got 10K, then fly Virgin because you're getting better value for money most of the time. Well, that is a very interesting point.

46:12The only way to get politicians to actually genuinely choose the cheapest fare on the day is capping them in how much they can spend for stuff they want to buy with these tickets. That's what you said. You give everybody an allowance and you can spend your allowance over the year. That's a great point. That's very much, we've built our Luxury Escapes business travel platform. I've spoken about this before, we basically say businesses can give their employees a budget per trip. You can technically do it. We can do it technically per year as well. We do it per trip. And if you can save money, well, basically the employee gets a percentage of that back to them in the form of like she grabs credit.

46:47So we've gamified it so that employees are treated like they own the business and you don't need that adversarial approach. That's great. And I think I'd love to see the government do that as well. Well, the only challenge with that, by the way, I actually completely agree with you. The one challenge you'd have to deal with is someone from like who lives in Sydney and someone who lives in Longreach, I say that to be ironic because that's where Qantas started. They're going to have very different cost of travel requirements to get to Canberra. And so you'd have to adjust it based on the electorate that they serve.

47:18And how we do it for LABT is we have based on the city pair. So if you're going Melbourne, Sydney for three days, that's got a budget. If you're going Melbourne to Perth, that's got a different budget, obviously, because it's much more expensive. I think that's great, that model. It's really good. Hopefully somebody listens to it. I can't imagine it's going to happen, but hopefully somebody listens. Well, why would that ever happen? They're number one. This is the trajectory of this whole debacle. This is the trajectory. Number one, yes, this is the prime minister. Yes, it looks terrible, but like I don't hold the hose.

47:49It's like the equivalent of I don't hold the hose, right? I don't set the prices. It complied with the rules. It was the closest I don't hold the hose moment that I've seen Albo have. First, he plays defense because, you know, know, they've got this political decision they've made that they're not going to hand scalps to the opposition. And so they just will defend everyone, even if it's unreasonable. And by the way, I think my general experience when I was talking to people about this, again, pre-Bondi, was a couple of people said, well, she shouldn't have to quit because it was within the rules, which I didn't necessarily agree with.

48:22But everyone that I spoke to, a hundred percent of a not inconsequential number of people said it's ridiculous and offensive. And people were genuinely angry that politicians were doing this. And I just say the Labor side, because that's who kind of got the heat. And I'm sure that some heat would have spread across. It was the Greens as well, right? But I'm sure. I'm not absolving the Liberal Party. I just don't know that they did it, but presumably they do. So I think that's where it started. And I think politicians are always desperate to let other people make the decisions about what they can spend on entitlements.

48:58So they can always say, I don't hold a hose. So what's it got to do with me? If they say to me, you can spend$4 million a year on first class flights or private jets. Well, of course I'm going to do it because that's the rules. And the thing is, just because the money is there, doesn't mean you have to spend it. I always say to people, think about your actions like this, Just because it's legal doesn't mean it's right. If you've got a business relationship with a friend and you can screw them legally and it's totally legal for you to screw them and then you choose to do that, it doesn't mean it was okay to do it just because it was legal.

49:34It's still ethically and morally wrong. Don't hide behind just what's legal. Don't do things that are illegal, but you don't have to run every law because it's there. You also can make ethical decisions for yourself. This is symptomatic of court politicians in general around the world, but Australia especially, where there's no consideration given to the value of money. We'll spend, whether it's on the NDIS or whether it's on travel for themselves, it feels like politicians view debt as just something that is irrelevant. We don't need to worry about it. We can steal from the future generations and spend it on today.

50:10and whether we're spending on boondoggles to get us votes or we're spending on first-class flights and business-class flights, it's all the same sort of pot of misfeasance from these people who just don't care about young people incurring this day. Well, apparently, before Bondi, the Prime Minister had planned to neuter this issue with this particular thing before Christmas because, you know, like he had a great year, the Prime Minister, politically, and then Parliament rose and it was looking great and then he had this and then he had Bondi as a bad end to the year for him, right? In fact, the only thing that people were more opposed to than this is, I saw a survey two days ago, a week and a bit after Bondi, that said, how do you rate the Prime Minister's efforts on combating anti-Semitism?

50:5456 % said no good, and only 23 % said good. And you think about that 23%. That is fewer than the number of people that vote Labor, let alone the number of people that vote Labor and the Greens. So he's got people who are supportive of his side of politics saying that he's done a terrible job of combating anti-Semitism. These last two issues for the year, very different in tone, obviously, but both, they're terrible for the Prime Minister and I think that they could do real damage to his popularity and he's very lucky that he just had an election earlier on this year and there's a long time until the next election.

51:37But that guy, we have to be honest and say, in the last two months, month and a half, when you look at him, he's looked, he actually looked like he's physically shrunk as a leader. Like he's looked worse and worse and worse every time he's spoken on these two issues. Speaking of travel, let's move on to corporate travel management, which we talked about a couple of weeks ago and in the last month, which has now been suspended, obviously, from the ASX because they haven't submitted their financials for June 2025. They're now six months late, more on that in a second. And in some good news, well, some relatively good news for CTM, it's won a reprieve from its lenders, announced the ASX a few days ago that it has – something has$177 million in the bank.

52:18and it is claimed that its lenders have extended$65 million in bank guarantees and a further$75 million in revolving credit. That's slightly down on the debt funding they had previously, but not much down. CTM also bizarrely stated that it's extended its 2025 reporting deadline to 30 June 2026. That's a full year after the actual period occurred, which is, I've never heard of this happening. A year delay in financials is staggering. CTM also comically noted as part of its debt facilities, it has agreed to obligations including enhanced financial reporting commitments, which to me seems a little bit weird given they've just delayed their financial reporting by six months.

52:59I'm not sure how they could possibly be enhanced and some other covenants they didn't disclose. Early in the week, this is something I brought up, but somehow they've gotten IATA to agree to let CTM continue trading after entering into a financial security agreement while its financial statements are being finalized. This could end up with a lot of egg on IATA's face if something does go wrong and airlines are out of pocket here. So we'll see how that plays out. I guess IATA was in a bit of an invidious position that they sort of take the plates away and CTM definitely go under, or they don't take the plates away and it might go under.

53:33So you kind of feel for IATA a bit there. They were a bit of a rock and a hard spot. What is that? Is it basically an elected representative body that's the union movement for airlines? So it represents the big airlines. I'm not sure if it's 100 % of airlines, but it's the big airlines. And if you want to sell air tickets yourself, you need to have an eye. So you can go through consolidators who are like a sort of corner, almost like a wholesaler, and they can do your air for you. But if you want to do the direct sort of air selling yourself, you need to be IR licensed in every country or globally.

54:01it's amazingly similar to the world of mortgage broking. So back in the day, if you're a mortgage broker, you would write individual deals with the banks at the very start of the industry or early on in the industry and you would have direct deals with ComBank and ANZ. And then the number of mortgage brokers just grew and grew and grew. And number one, the banks didn't want to have to manage all of this. And then intermediaries popped up, right? These broking aggregators. and it got to a point now where you can't really sign a deal with a bank. You have to go through an aggregator if you're a mortgage broker and they take their little clip and some of them provide software and whatever else it is, but you can't do a deal directly.

54:42So when you do a deal with Virgin or Singapore Airlines, will you deal like are you signing a contract directly with the airline to sell their tickets? There's a few different levels. We've got an incredible guy who runs our air business who's come from STA and more recently Hello World. So he's got great relationships with airlines globally. So we'll do a lot of what we call sort of private deals essentially, which essentially is a way of getting slightly more margin because obviously margin in air is incredibly small. It can be sort of 3%, 2%, 0 % sometimes. So it's a really hard product to sell with that kind of – like this is gross level, let alone net level.

55:23So it's a really low margin business, obviously a high purchase price, but low margin business. So there's a couple of levels. You've got to get the agreements with the airlines directly, but then you've got to be able to sort of physically be able to sell it. So which involves getting these IATA plates. Otherwise, so you can get a global IATA license, but what generally people do is get it by country. So where was the IATA in Australia? Where IATA in, I presume, in New Zealand, but we're not IATA in other countries. We're not IATA in Italy, for example. so we can't if we want to sell air tickets in Italy we have to go through a consolidator presumably an Italian consolidator who resells it for us so it's a bit of a confusing sort of area so CTM obviously would have plate IATA plates pretty much everywhere it operates they're a big business and had IATA said no you can't sell anymore that would have been they would have to go through consolidator which which they could have done it just wouldn't have seemed severely impacted profitability and their margin yeah and what about with hotels does it do you have like I know you have individual deals with a lot of hotels, but beyond that, all the hotels you don't have individual deals with, you sell on your website, there must be a consolidator equivalent for hotels.

56:30Yeah, they're called bed banks. So you may have heard of web beds, which used to be the old path, the old web jet. There's one called hotel beds. Expedia has the biggest called Expedia Partner Solutions. Booking's got a pretty big one. The Goda, which is only my bookings got one. So there's about a hundred of them globally or more than a hundred and you get like relatively niche ones in certain countries like Rakuten in Japan, for example, we talked about Rakuten before. They've got a pretty big one in Japan. Donata has got one in the Middle East. So a lot of these businesses who are really specialized in certain countries will effectively, and what essentially happens with online travel agents is everybody shares the content.

57:05So Booking and Expedia, I think are really firm competitors. They'll sell product to each other. So how much would they keep? Because it's interesting. So Booking.com will sell direct to you through their site. And they're going to keep what? 20 % of the price, let's say, ballpark? Can be more for booking. But yeah, call it 20 roughly. And so then sometimes they won't sell the hotel room, but they kind of will facilitate the hotel room anyway. And so how much do you think they're keeping? They're not keeping 20 % of the price, like 2 % and the other 18 goes down the line? Yeah. As a consumer, if you go to booking.com, you'll often see the cheapest option is what's called a partner deal or partner offer.

57:43And it's almost always the cheapest and almost always the strictest terms, like not refundable, you got to pay up front, blah, blah, blah, but you're going to save 20 % or whatever it is. Those partner offers are almost always sourced from someone else. That's why they call partner offers, not direct offers. So obviously partner offers generally go okay and you're paying less, but there is a risk because there's a middle, it can be multiple middlemen involved. There is an extra degree of risk where something can go wrong. But hang on, when you say it's a partner, do you mean it's not coming from booking.com's own pool of hotel rooms?

58:14It's coming from somebody - Exactly. That could come from Expedia, that could come from an OTA, an online bed bank you've never heard of. Could be hotel beds, could be web beds, could be any number of bed bank operators. Could be DITA, which is Japanese - I think of booking.com, the way I actually think about it for hotel rooms is there's the booking.com website. On that website, they're selling hotel rooms from the relationships they have directly with hotels as well as running some rooms that are being sold from non-booking.com relationships that they make available. And in addition to that, they're also selling hotel rooms from their own relationships off their site in other places, maybe on Expedia or maybe on like luxury escapes or something, right?

58:59Yeah, absolutely. Yeah. We buy from a go to, not booking, but the same business essentially. And do they pass almost all of the margin down the line to whoever's doing the selling of the room? That is a great question and it's very opaque. Ultimately, we don't know because the bed banks don't tell us. My gut feel is if their margin is 20%, they probably keep about 6 % to 7%. Well, that's crazy high. I mean, that would be the equivalent of retaining 30 % to 35 % of the margin on a product. Well, the only sort of caveat on this there is it's a low margin take. So the total take is only 20%. So you're only taping 7 % of the total sale.

59:41So it's relatively small as a gross margin. But yeah, it's obviously much less work selling to a B2B sale than a B2C sale. Well, do you want me to tell you what I got paid as a cashback business from Hotels.com? Yeah, tell us. They paid me, I think it was about 7%. Yeah, that's pretty standard. There's a bit of dark arts that happens here. So what often happens, especially for sophisticated online travel agencies, you're dealing with a number of different bed banks. So whoever gives you the best price you'll take, we're obviously agnostic, the products largely commoditize. So if Webbeds gives a better price than Hotel Beds, or Stuby gives a better price than Webbeds, we'll just go with whoever gives the best price.

1:00:19And the pricing is constantly changing. So whoever's got the best relationship with the hotel is one who gets the best price usually. So I'll tell you what the stack of people getting, clipping the ticket is when you buy on a cashback website. So the customer buys, the cashback website gets paid. The cashback deal aggregator gets paid because that's who the deal is coming from. Well, cashback also goes direct as well sometimes, don't they? It's super, super unlikely that Hotels.com will sign a direct deal with a cashback provider. Yeah. Maybe Shopback will have one. Shopback, maybe. Maybe, right?

1:00:58But Shopback offers 3%. So if they do, they're keeping like, I mean, Shopback, I mean, you know, now Shopback's very profitable because like I can't use cash rewards. but like I've noticed that some things have dropped like hotels.com is 3 % now it's barely worthwhile it was 6 % on cash rewards very frequently but so there's generally aggregator getting paid presumably that aggregator gets it direct from hotels.com and then hotels.com is paying the hotel there are so many people clipping a ticket along this journey it is actually insane that's the problem and that's what you have with bed banks as well and OTA so you're often dealing with somebody you don't even know so it definitely that's why the beauty of what we and when you have a direct exclusive deal with a hotel, if something goes wrong, we're on the phone to the hotel straight away.

1:01:43So the direct stuff is great. It's usually the best deal and also the best, if something does go wrong, it's also. Back to CTM though, I guess you'd say it's a pleasant surprise in one sense that being able to, I guess, live another day. The$177 million in the bank. I'm not surprised. I told you they weren't going to go broke. I think we said 30 June, so I've got a bit of time here. Plenty of left to play out here. Yeah, but they're not even going to report their results by then. Well, I think to get back on the boards, I think they may need to issue a perspective. So there's actually still a real chance these guys never trade again, even if they do somehow remain solvent, which is still like, there's still 160 million bucks in refunds that have to come out of this business.

1:02:24So the only thing I can think of, they somehow told their customers, we can't refund you. You're going to have to hold on as long as we need. And customers have said, okay, because it doesn't make a huge amount of sense. These customers have been stolen from. CTM, as in they had a refund owed to them and CTM just collected it. Like if you're, you often see, I get these sort of travel agent publications every day or every week. And every sort of two or three months you see Johnny Smith, travel agent in Manly, is going to jail because someone got a refund. They took it to their own bank account.

1:02:56And these people go to jail. Because these guys are a big public company, they don't go to jail because they haven't been anybody in public companies go to jail. And they're doing exactly the same thing. that they've stolen money that should have been paid back to the customers. And this isn't like you understand once or twice, whatever bad systems. This was systematic over years where they were stealing money. Do you know what we call this? This has got a name in business. It's called too big to fail. And so all of these investors, these funds that have pumped money in, they don't want this to go to zero.

1:03:28And all of these lenders, they don't want this to go to zero. and all of, and IATA presumably, because they're so big, like it's not going to be good if they go broke. It's not good news for IATA. And so we get into the, start getting into the travel equivalent of too big to fail. It's not the same as the banking, right? It doesn't bring the system down. Yeah. But like this will cause, this will cause enough damage to enough people with vested interests that they want to keep it going almost at any cost, I think. We saw in the UK, Thomas Cook, which was a massive business, That went down, took probably longer than we expected, but that was a huge insolvency.

1:04:03Imagine, not Flight Centre is obviously a really well-run, profitable business, but almost a business with the same brand cachet as Flight Centre going down. That was just catastrophic in the UK. So that was allowed to go down. It does reach a point where the charades are. But they let the first one go down, right? Like Lehman Brothers, they let that go down. And then they're like, oh, we can never let that happen again. So like the first one sinks. and then they're like, well, that was terrible. Let's keep the rest going. What price? Because you can trade these stocks. They're not tradable on the ASX, but you can still get your hands on some if you want some.

1:04:38Someone will sell shares to you. For sure now they will, right? These funds would love some liquidity with their stocks. Thinking about their closing price when they were suspended. So just to correct, I made an error last week. I thought it was 1.6 billion. It was actually capped at 2.6 billion before it just got suspended. Because there's got to be a price where you're going to buy these shares. There's got to be a price. $1? As in a company value of$1. I wouldn't pay any money for this business. I don't think it survives. So if you had shares, if you were unfortunate enough to own shares in this business now, and I came along and I said, you know, the last price was what?

1:05:15What did you say? $2.2 billion. I'll pay you$220 million valuation for your shares. So you take a 90 % haircut. Would you sell those to me? Totally, because you get a tax loss as well. So do you know the sort of rules for getting a tax loss? Yes, like you either have to sell or the business has to be wound up with a formal, yes, that's right. It's not easy to get the tax loss. I had that issue once. I thought that once the sort of business is off the board, you can just claim the tax loss. I found out the hard way you can't. You have to essentially have the, so I had to find for a business that I own that was listed that basically died, but sort of stayed on as this zombie business.

1:05:55I had to find someone to buy the business for a dollar from me, buy my shares for a dollar from me. And they got the upside. If there was, I don't know if there wasn't any upside or not, but I just wanted to claim that tax loss. And I thought you could just claim it. I was very wrong. Yeah. Well, the fact that you said that you would sell at a 90 % discount, and maybe I could, look, I could probably get you to sell at a 95 % discount. It's hard to know. I would sell at 99.9%. I'd want to claim the tax loss. You would. But I tell you, the thing with you, though, is that you didn't believe in it.

1:06:24And so there's no emotional kind of admission of wrongness, right? Yeah, easy for me to say. Yeah, but my gut feel is that you might be able to go around behind the scenes today and go to a whole lot of shareholders and offer them some pittance sense in the dollar of the last share price, and you might get to 20 % or you might get past 20 % and have a shot of just taking this thing over. I think that is the window of opportunity of a transaction. I mean, I don't run around doing it because, as you said, the risk is just too high on this thing. If you're in the high-risk game, I mean, God knows what the debt is trading for in these businesses now.

1:07:03Well, it's not much. There's very little debt. They've got that revolver, and it's not a business, thankfully, that has much debt. There's no bonds, right? No. I think the trouble I have for this one is you've effectively got negative cash. When you factor in the refunds, you've got less than$0 cash, and the business before this all happened was losing money. So maybe it has historically made money, but it hasn't the last couple of years. So the question is, I don't know how much money you need to keep the lights on is the big question. Do you not think you could make money out of this business?

1:07:33I don't know enough about it. I'm just basing off their historical performance. I don't think they were historically bad operators. They were obviously not good, but I don't think they were incompetent. So I'm just not sure there's a business here. And you think the likes of players like Flight Center, who are obviously much bigger and have a corporate business, and Navan, who is like just a tech business base. I mean, they're not really. They've got people on phones, but they're heavily tech focused. You think this business, corporate travel, might be wedged between those two things in terms of being able to make money?

1:08:08And you think like what would Flight Center be willing to pay for it? Like they pay something because they're getting the customers pretty quickly. Yeah, you're getting the customers. but I wouldn't be like, they'll probably get the customers anyway. So I'm not sure they'd be willing to pay that much. So you pay, maybe it's a flight, so you pay a couple hundred million bucks for the customer base, maybe. Well, if I'm Flight Center now, am I just not ringing every fund manager, ECP, Ben Along, whoever else has got funds in this thing, shares in this thing, saying, I'll buy these at a pittance, you can write it off, and building a blocking stake in this thing and then, you know, playing that game.

1:08:42I mean, that feels like the game I'd play if I was Flight Center today. while at the same time going after every single one of their customers very aggressively is what I'll be doing. And Pilates are a very well-run business, so I'd be shocked if they weren't doing it already. This is a lot to play out there, but to be a year and not submit your financial statements is a disgrace. So shame on you, corporate travel management, and to the investors who bought in, they've got all sorts of problems. We'll just go into it. Just finally, we'll finish up our most popular segment, our famous M &A Deep Dive, of course, brought to you by Terram Capital, our great mate, Scott.

1:09:14Terium Acquire, technology companies to grow sustainably over decades. The Berkshire Hathaway of Australia. If you're thinking about selling, getting some cash from your business or your hard work, discuss how it might work at terium.capital.com. We know they're a very good operator down at Terium. And today, we actually do have an M &A deep dive today, and that is our friends at HotDoc. You're a doctor so close to your heart, and obviously I'm a small indirect shareholder in both Hot Dog and a direct shareholder in Health Engine. So, an issue close to my heart. So, you're going to see in Street Talk last week that Potentia Capital, so Andy Gray's private equity firm, has agreed to acquire Hot Dog, Australia's largest GP booking platform for $250 million.

1:10:00Potentia outbid PE giant PEP, Pacific Equity Partners, to get the prize. It's understood Hot Dog is making around$10 million in EBITDA on$40 million of sales. and most of that EBITDA has come from turning on telehealth about a year ago. StreetDoc reported that HotDoc's online platform makes 25 million appointments annually on behalf of 13 million Australians with 23 ,000 GPs. StreetDoc claimed that HotDoc has a 70 % market share, which I've got on good authority is completely wrong. Its market share is more like 55%, but still has done extremely well in the last six or seven years. Hot Dog was founded in 2012 or co-founded by Ben Hurst, who was a doctor who worked at the Melbourne Port Phillip prison.

1:10:43The business struggled initially, performed brilliantly over COVID and overtook Health Engine's market share across the board. Hurst is understood to own around 15 % of Hot Dog and will make about 40 million bucks, which is a great result for them. The move is especially interesting given Health Engine, of which full disclosure, I'm a direct shareholder in, has been rapidly gaining ground on HotDoc and recently released its AI receptionist product, which has seen incredible growth. At rates we've seen whether Potentia or PEP, who was the underbidder on HotDoc and of course owns the Magentus business, which is founded by my good mate, Mark McConnell, will make a play for Health Engine or the combined business.

1:11:21Magentus itself is a roll-up of Citadel Health, Wellbeing Software and Genie Solutions and is run by Rachel Powell, who we know, and used to be a SIC executive, and Rachel's done a great job there. A combined hot dog health engine business, we've talked about this before, would have potentially$100 million in turnover and profits of upwards of$25 million. This is right up your alley, a medical M &A deal. What are your views on potential buying hot dog? So you've got some insight into these businesses and this process, and I've got some insight into these businesses and this process. And I said I wouldn't talk publicly about anything I'd gleaned from my various discussions with Health Engine and with shareholders of both businesses.

1:12:08So I'm going to try and speak precisely, but I'm not saying everything that I know about this just out of respect for those people. Maybe the first thing I'll say that will make me unpopular is that I think if you got health, so Health Engine and Hot Doc belonged together. The fact that nobody could ever get them together was not because it didn't occur to anyone. I would have had a dozen people over the last five years say to me, will you please help me get these two businesses together? And for one reason or another, we won't go into the dirty laundry here, but for one reason or another, they would never go together.

1:12:43They would just, it just wouldn't happen. And so I thought that that would be severely value damaging for each of those two businesses. But what the hell do I know? Because somehow Hotdog has managed to get a price of$250 million for a business that I think if you put it together with Health Engine, maybe that's worth$250 million. And you've got a business here that is subscale. I'm going to say things that are critical, but what I really want to do is say something nice first, which is I think the resilience and persistence of Hot Dog and Ben Hurst, who I only ever met once, is very impressive.

1:13:23Nobody has a negative word to say about Ben Hurst as a human being. In fact, all I hear is the polar opposite of what a good guy he is, how not motivated by just you know like corporate greed or anything like that he is he just is like you know stand-up guy etc etc but um but i think it is trickier for a founder to merge with a competitor than if there were two independent ceos because obviously um like health engine it's a whole different kettle of fish right that would be a much easier probably more open to merging kind of transaction. Well, Health Engine was run by, that was founded by Marcus till recently.

1:14:04Marcus is obviously still involved. Dan Stinton does a great job running it now. I think he's been an incredible CEO as a sort of a manager CEO. Marcus is a tremendous guy. The other dude that founded it with him is also a tremendous guy. I met them years and years and years and years ago. Is he about Adam Yap? Yes, Adam Yap, exactly. Dan is doing great and I'm sure that Dan would have found it pretty easy to find a way to merge these two businesses together because he doesn't have the baggage of having competed with the other one for his whole working life. I think Marcus has low ego as well and Marcus would have been more than happy to do a deal that made sense.

1:14:40You might be right about that. But generally, it takes special founders or a special founder to find a way to merge with a competitor for the benefit of everyone when they've dedicated so much of their life to trying to destroy that other competitor. And it's not easy. Like I'm not saying that in a critical way. Now I'll say some quick things.

1:15:04So this is a subscale business, Hot Dog. What's the revenue? 40 million or something. I think just on that before you move on, I think that it appeared to be that the Hot Dog side was less reluctant to do a deal than the health engine side historically. And I think they've now been largely vindicated to getting this$250 million price, which nobody thought they'd get. Hot Dog was more reluctant to do a deal. And I think Ben was more reluctant to do a deal. Yes, I agree with you about that. But yeah, well, they have been vindicated because sometimes like your lottery numbers come up. But I think if you look at them, 40 million bucks making 10 growing, I think it grows at sort of 25, 30%.

1:15:3810 EBITDA. 10 EBITDA. Yeah, I think so. Yeah, okay. That is not making 10. That is making 10 of EBITDA. Yeah, but we're talking EBITDA. 25 EBITDA multiple is toppy, but not at. We see business sold on revenue multiples of 10 times, 15 times. So it's not completely outrageous. All right. So I'll just say the bare case. Because rather than me saying, I think these negative things, because I'm not sure, I don't know it well enough to think anything negative. But I'll say the bare case from arm's length based on not using any information I know that I gleaned from the inside, just using publicly available information that's been reported.

1:16:16So this is what you could say. It's a$40 million business. It's not growing like a rocket. What do you find as rocket-like growth? 30 plus percent. Oh, I think it's in that ballpark. Well, not its core business. So let's come back to that, right? So maybe I should say that. The core business isn't growing like a rocket. It's got a competitor that's equally as large and well run. So that would be a negative for me in acquiring it as well, unless your plan was to acquire the competitor. That's a big unless. I think this deal hinges upon putting them both together. Well, that is a great position for Health Engine to be in if that's the case.

1:16:53And they're going to get$500 million for their business because I think Health Engine is pretty happy to compete against this acquisition by a PE business. This is my understanding broadly of what has been going on in this space. This telehealth, I've got some issues with telehealth. I always joke with telehealth. It's not a joke. I'm actually being serious. If you want prescription medicine, as long as it's not like crazy stuff like opioids or something, which are a bit more hesitant. but if you want prescription medicine you just do a health consultation you get charged a medicare fee it doesn't even have a pocket and you just say yeah it's a repeat i've had this before nobody checks like it's farcical what's going on okay i think that like the this is not going to stay like this it's undermining medicine and this is not me you know with my comments about things like eucalyptus which is very narrowly focused on a particular niche i'm talking about broad telehealth consultations.

1:17:50And so what we've seen is various models for the rapid rise of telehealth consultations. And a few businesses have done that. And it looks to me like Hot Talk has done that especially well in terms of generating revenue from it. They basically turned on telehealth, I think about 18 months ago, two years ago. And that basically created most of their EBITDA is my understanding. Yes. And so I'm not saying as much as I know about this but i'm talking in broad terms okay and so i'll say this in broad terms the greatest growth you ever get as a percentage is from zero when you do it when it's not on to like when it's turned on 12 months later on the like for like and then it gets harder for like for likes and then there might also be a question about whether what other parties are going to do in this space not just health engine there's lots of parties i use these people called hola health i don't want to advertise them because i think it's way too easy to get prescription medication from them which i might have that might have even been a better ad for them ironically but like um i think this space is an unknown this telehealth space these businesses are so obviously subscale as a standalone business that they did i know you can't bargain on winning the lottery like this like they should have gone together potentially smart they've got good returns they must have seen something to pay this price, but it is very instructive that Mark McConnell, his business, did not with the underbidder.

1:19:17So they are a business rolling stuff up. You would think they would have great synergies rolling this up and they've said, nope, too expensive. I think private equity, like generally good private equity operators with a strong track record like Potentia. They figure out ways to make money, but it'll be very interesting watching them make money here. And I don't think they're going to get a bargain from Health Engine because I think Health Engine has no fear about competing with them whatsoever. I think as a standalone purchase,$250 is on the toppy side. We don't know what the terms were and there could be some preface in there.

1:19:54Who knows? Well, I've got some businesses to sell you, okay? If you want to pay 25 times EBITDA, look, I'm going to stack up some businesses and you can pay me 25 times EBITDA in cash for every one of them. Well, you're paying a lot more for like a West Farmers, for example, which is growing at 10%. So if you look at what the public markets are offering up, like compared to the garbage on there, and West Farmers is not garbage, I should add. West Farmers is actually a high quality, albeit highly overvalued business. Well, let's just call West Farmers Bunnings, basically, shouldn't we? Or Bunnings and Officeworks, both excellent businesses.

1:20:26And I think there's also, isn't there Kmart in there as well, which is the jewel in the crown? Yeah, but West Farmers is basically Bunnings, isn't it? That's the business. Okay, that's a pretty decent business. But what you're paying for is dividends, reliable dividends, the likelihood that the – I mean, I think it's overvalued, but at least I know why I'm paying so much for West Farmers. Yeah, so you've got a 33 PE for West Farmers. You've got a – is it 60 PE for Chemist Warehouse? So you've got – and these are obviously very high-quality companies, don't get me wrong. They're amazing businesses, but you're paying a fortune for these businesses versus a much faster growing hot dog, the ability to potentially roll up health.

1:21:03You roll up health engine hot dog, there's so much duplicated cost. There's great... So health engine released this AI receptionist thing. And my understanding is it's deflecting like 50 % of calls. So that's... And they'll get it to 100 % soon, I suspect. So you can get rid of receptionist or you can save costs or have receptionist doing multiple things. That's a huge win for dentists, GPs, et cetera, who are using the platform. It's very low cost. So maybe you're paying 10 grand, you're saving 100 grand. You roll that across Hot Doc's platform, suddenly you can charge them extra. There's great revenue synergies.

1:21:37I think the combined business makes at least$25 million, potentially more, is growing 30%. That's a really nice business. All right. That's great. So what are you going to pay for the second piece of it? Oh, maybe$200,$250. Okay, so now I've got 500. So you've paid 500 million bucks for a business making 25, 30, growing 30%. That to me sounds good. Well, you've already got it to 30. So like the thing is this, I agree with you, it's got potential. It's more than a market leader, right? It basically owns the market. But I think, you know, you've gone from 10 mil of EBITDA to 30 in the plan you put some pieces together.

1:22:13So I agree with you, there's some synergies or whatever. but I just I feel like Hot Dog was$150 million business it took 13 years to get to$40 million of revenue we know that the chunk of that revenue was driven recently by this telehealth thing and so if and so I think you're what are you betting on with that 250 so you think but one of the things you're betting on is roll up maybe so you're going to assume number one that Magentus will be happy to let you buy Health Engine yeah so that could be a bidding war I'm not sure they'll get it. It depends how much the potential fund is and how much they're prepared to pay.

1:22:51But Pep, I mean, Pep is huge, right? Now, I don't love Pep for reasons I'm not going to go into on this show, but they've certainly got a lot of money. I think Pep, I've never dealt with Pep at all, but they'd be, if not the best, one of the top three PE funds in Australian history in terms of success, for sure. Yeah, I agree with you. And they're ferocious, right? And so basically, it's not a lay down was there that they get the second piece of this roll up like they're going to have stiff competition for it that's why i say to you i reckon health engine might be the smaller business getting the higher price like sometimes it's not about quality of business it's who wants to buy you and i just don't understand why potentia didn't do both deals simultaneously it's a bit the chicken it's a bit the taurus in the hair but multiple times so you had health engine were sort of by far the biggest business in 2017-18.

1:23:43I remember they raised from Sequoia, Sequoia, India, now a different name. And then probably had a bit of a period where they just probably focused on the wrong, a bit unlucky with COVID and they're sort of focusing on the wrong thing. And HotDoc executed beautifully over COVID. They had some great tools that allowed GPs to really function very well. So COVID definitely helped HotDoc and it was great timing for them. so hot doc then leapfrogged and it feels like health engine now are coming back the ai stuff's going really well they dominate dental they're catching up on gp because i think hot doc were focused on this and focus on monetizing so no i'm with you on this but why you don't agree with my sentiment which is you go to health engine at the same time i can promise you health engine will take 250 for their business because it's not as big and so like based on you saying it's 55 market and them saying it's 70.

1:24:32It's one of those. It's not like neither one of those is less than half. Yeah. It's slightly more than half. Yeah. They're definitely not 70. There might be 70 % of GPs, but that's irrelevant because you're looking at the whole market and the whole business, not just GPs. And so I don't, again, without saying anything from the inside, it's hard to imagine the shareholders in Health Engine are not taking a$250 million valuation for their business. And so your whole little theory that you've got going there about 30 mill of EBITDA, maybe it's true. But if you want to play that game, go to Health Engine at the minute you know that you're an exclusivity on this deal and ram a 250 deal through on Health Engine and that's the end of the game, right?

1:25:09You just say, we'll give you this on the same terms. We'll just run the same terms for you as we're doing on this deal, but give us exclusivity, don't go to market. Isn't that the way to play this deal? That's how I would have played the deal if you really believe in the roll-up of these two. Yeah, who knows? I haven't spoken to, I certainly haven't spoken to Hot Doc and I don't know the potential guys. So it's hard to know what they're thinking. What was the raise at for Hot Doc? The most expensive valuation previously. Do you know? I got a feeling it was 120. All right. So people made money out of it.

1:25:40Yeah. I think I'm an indirect shareholder via Ari and Ben at RightClick because they came in pretty early. And that was actually, I was a bit critical at the time because Hot Doc was struggling there. But it turned out to be actually an incredible investment for RightClick. And RightClick, that fund's actually done really well. They've had a few great – they're good operators, Aria Band, obviously. But yeah, I think they came in at like 40 and there were subsequent rounds up to sort of 100, 120. I could be wrong, but that's why I think it's around that level. So I think everybody in Hot Doc – obviously, the four founders have done very well.

1:26:07But I think Airtree is the biggest shareholder in Hot Doc. They've done extremely well. I'm pretty sure Airtree are actually trying to sell their stake at some point. And I think for the best, they didn't. So Airtree – the Airtree fund will do very well again. That's been a great story from Craig. And this was Craig's investment, this one. And obviously, Daniel's done other ones. So there's a lot of winners out of this deal. So it's actually a great result for the ecosystem and fantastic for - So if you invest at 40 and it goes to 250, presumably after dilution, you probably still made 5X on that investment is my guess.

1:26:40And so 5X in 13 years, I mean, you'll take that. That's pretty - Oh, listen now, because I'm pretty sure right click came in in 2017 or 18. Right. So 5X in seven years. Yeah. Well, that's a good investment. depending on how much money you can deploy. But like, you know. Airtree were a bit earlier, but Airtree had a big chunk of hot talk. I think Airtree was sort of upwards of 40 % from my understanding. Could have been around that. So Airtree have done exceptionally well here. So, I mean, that's more than a 40 % internal rate of return, 5x over seven years. I mean, you take that every day of the week and you take, you'd like to take half that every day of the week.

1:27:25It's actually a great story on persistence. If you go back to 2018, 19, Health Engine obviously had their issues with ACCC, which has been unlucky. But Hot Doc were almost an irrelevance. They were a clear number two, well behind. And it just shows the value in persisting. And yeah, they had a bit of luck in COVID, but they put themselves in the right position to execute. They focused on GP and they built a great product. They really focused on product in that sort of 16, 17, 18, 19 years. And we're in the right place at the right time to have that great explosion. And then obviously, telehealth helped them out again the second time.

1:28:02I feel it's a bit reversed now with Health Engine last three years investing in product and Hot Doc probably focusing on profitability. So they kind of have switched a few times. So both great stories, both great Australian business stories, built incredible marketplaces in what was a really fragmented sector. And provide, I'm in the UK now. If you want to go to a doctor in the UK, good luck. You actually can't. These platforms don't exist. Whereas in Australia, it's actually super easy. So consumers have been the biggest winner out of this, I think. It makes it so easy to book. If my doctor's booked out, I'll jump on Health Engine and find another one in two seconds.

1:28:37Or Hot Dog if I can't find something on Health Engine, but I always can. It's actually an amazing service for customers. It's great for practitioners. It's so much more efficient. it's really created a great win-win-win for the second really what marketplaces are meant for so this is actually a really great new story for everyone customers practitioners shareholders founders like i see no loser here so if i'm a direct investor in health engine like you might be well i am i've disclosed that no i know i get that i think i love this transaction don't i there's a great transaction for you yeah i think you get this sometimes you say and this will be shareholders in my business.

1:29:16People see another business getting a price and they go, they're annoyed. Oh, why wasn't this us? How did these guys get all that money? I saw this and we were extremely happy when we saw this result because ultimately it sets a benchmark in the market. And obviously, it means you've got a financial buyer who will be much less emotional, as you talked about before, than potentially a founder. And I sort of see where the founders are coming from and why it could be hard, but obviously financial investors don't have that issue. They're purely about profit maximization. So yeah, as a health – I'm obviously a tiny shareholder in Hot Doc and I'm a bigger shareholder in Health Engine.

1:29:50I was rap seeing this deal. This is one of the best deals I've seen in a long time. Just for the ecosystem as a whole, it's a great result because we haven't seen many exits and this is a great Australian PE business and potentially buying a great Australian business in Hot Doc. So I was elated to see this news. Again, Street Talk nailing it. They don't miss much. So this is a great story for the ecosystem. It's always interesting to think about who leaks it to them. Who leaks this deal to them? Anyone, because it's such a great result for everyone. No, but this is not when it was leaked. It was leaked like four weeks ago.

1:30:24I mean, in fact, it was leaked earlier, but like we knew four weeks ago that this was almost certainly going to close. Well, it's just whoever was worried that it wouldn't close by Christmas leaked it, didn't they? Just to put some time pressure on the other party. And so I don't know which of them was worried it wouldn't close. but I suspect, yeah, I suspect, actually it's impossible to know which one wouldn't have closed. It's always a banker. It's always a banker that leaks. The question is who's banker. Exactly. But like I think if I'm the, generally if I'm on the sell side, I'm trying to hurry the things up rather than the buy side because I want my money.

1:31:00Yeah, totally. But from what I hear about Ben and the team at Hot Doc, like they're not trying to just grab a bag of cash. So I'm not sure their side would have leaked. But you're right, it's always the banker, so we never know. We never know who it is. I think Health Engine today, I mean, anchoring is real. It's a real thing. And this has just been anchored to$250. And so if Health Engine, Health Engine is almost certainly going to start with a$2. And I would not be budging for less than$250 if I was Health Engine today. I think get a really good investment banker and create the auction of all auctions to try to put maximum pressure on buyers.

1:31:39And I'm not sure that you need to do it today. You can do it in a year. I'm actually not aware of – obviously, I'm a shareholder in Health Engine, but I'm not a big shareholder. So I'm not really sort of up to what on earth is going on there in terms of day-to-day or even sort of in terms of corporate level. But what I do know, and I sort of spoke to them six months ago, and they're executing really well. and the AI stuff's going really well, as in the receptionist stuff's going really well. So I think that's the most important. I think what they need to focus on is how do we make this business the best business we can?

1:32:06And ultimately businesses are bought, not sold and a smart buyer will see good performance. And I think putting these businesses together, we said it, I think we had one of the shows six months ago, we said that this just makes so much sense putting these businesses together. They go beautifully together. And you've got, what makes it even better is that one strong, so hot dog's strong in GP, the health engine strong and allied they both have obviously some interest in the other but that's what they're really strong at and even operationally they've both got different strengths once month health engine's better at marketing and ai and hot dogs really good at the telehealth stuff and call it the practice management stuff so they actually have really um complementary strengths both from a customer and an operational perspective so it's such an obvious business to put together like i've got no idea what price health engine will get or anything like that i'm I'm not sort of speaking to them about any of that sort of stuff, but I'm sure they'll do a great job with it.

1:32:57So this is my, I'll finish with this. This is my macabre prediction, which I hope doesn't come true, but I've just got a bad feeling it will. Basically someone is going to have a telehealth consultation and they're going to end up dead because of it. And it will be someone that is very appealing to the media. I don't mean a celebrity. I don't even know what I mean. Because what I mean is this would have already happened. People would have died because of telehealth consultations, in my view. People die because of actual health consultations as well. It's a self-driving car issue. Yeah, we agree, right?

1:33:33And so someone will end up dead because of a telehealth consultation that will be very media-friendly to run the story, and there'll be an outrage. And then the tip of the iceberg dodgy stuff will start coming out, and people will be more outraged and then the industry will end up regulated properly. That's my guess of how this is going to play out in the next couple of years. So I hope I'm wrong about that. But I do think some of these telehealth consultations I've had with general telehealth have been so ridiculous. Mind you, I'm going to keep using them because this serves a great purpose for me.

1:34:11Like I know much more than the average person about what I need from health. I just don't have a script book, right? but like it's just so ridiculous some of the stuff that's going on there that i find it hard to believe some disaster is not going to happen that is um kind of very you know like media friendly to get lots of clicks and ultimately that is what drives change i just hope and i hope the same with self-driving we know that that self-driving cars are 90 plus percent safer than oh yeah they'll be killing someone soon for sure i think so i think hopefully the media looks through this and well we'll see i think there's there's been a few issues of self-driving cars and largely this has been reporting but i think people have been pretty rational and hopefully telehealth i agree with you telehealth is a bit of a wild west but i think overall like if you look at the uk you can't see a gp like having telehealth over here is is a massive improvement because at least you can see someone so and especially take out i hear you but we have to be realistic about how the media works and how human beings function.

1:35:15I don't know if you saw the self-driving car that drove through the area that had been shut down by police. You saw that right through the middle of the crime scene? And because like it looked fine for the self-driving car. And so, you know, there's all these edge cases and, you know, God forbid some kid is killed by a self-driving car, but it's inevitable. It's going to happen. And as soon as that happens, there's going to be this enormous irrational backlash. against self-driving cars, but I don't think it will be permanent. I think ultimately this technology will be adopted en masse, but it's inevitable that it's going to happen.

1:35:51The beauty is because they've racked up millions of troops already and we've got the proof of 90 % safer. I think people are, if self-driving had killed a bunch of people initially, then it would have been really problematic. Now they've got a bunch of runs on the board. Same with telehealth. They've got a bunch of runs on the board. I think people, and there's also that cognitive dissonance. It's so cute how you're so irrational. This is not how human beings work. They're going to put the face of that poor kid on the front page of the newspaper. I think there's a bit of near miss theory. I think if you've been using a self-driving car, if you've been using telehealth for two years and you've had a great experience with it and someone dies or someone gets hit by a car or whatever it is, then you go, well, I've been using this for ages.

1:36:31I've been fine. These people were, they did something wrong. It was an edge case. It was unlucky. I think people are more rational than you give them credit for. And I think people will look past, And media is more fragmented now, so it's harder to get something in sort of – obviously, you have a Bondi massacre that's different. But I think for like sort of these isolated cases of things going wrong, I'm much less bearish or sanguine than you are. I think we're at the point where this stuff, whether it's telehealth, whether it's self-driving, is largely enmeshed in human psyche now, certainly Western, Australian, US, UK psyche.

1:37:03So I actually don't think that existential threat is the threat that you are worried about. No. Well, I don't think it's an existential threat. But like I do think – my predictions have been good so far. I picked two of the three things that Elba was going to do about entitlements. And he should have done the third, by the way. He just didn't want to because, you know, mates. And himself. He's the biggest grifter in them all. Yeah. Well, he's got his own plane. He doesn't have to worry about this stuff. And also the corporate travel. So far I'm right about the too big to fail. We'll see how it goes.

1:37:35Listen, I definitely accept that I might end up being wrong about that. But my general – I know we're going to do some predictions or something on the next episode. I was going to say you've segued beautifully into next week's – our famous prediction, one of the favorite episodes of our year for our listeners where we go through our prediction. We see who got it right, who got it wrong last year, which is always good fun. I'm always – I know you always reject this, but I'm terrible at general predictions. but I think what I can predict is I understand a lot about how human beings think and respond emotionally to things and therefore stuff like um the entitlements thing or stuff like what like this is how I feel about this telehealth thing or the self-driving car which is still to be proven but like I think I have a feel for how people are going to react emotionally to situations and so it's much less a prediction and much more of a it just feels natural to me how that's going to play out.

1:38:28Whereas predictions of like, you know, where's the market going or where interest rates are going, I find that much harder. Well, last year, as in the predictions for last year, you did really well. So I'd be very interested to see how we go this year. So what I do is I go through last year's episode and rate ourselves. But I might've just picked a lotto numbers last year, to be honest, and they just happened to come up. No, I remember we both got the interest rates thing dead on right. That was remarkable when everybody said interest rates were going and get smashed and drop a lot and we correctly predicted they wouldn't.

1:38:57This year we're a little bit off with it but we're interested to see how we go through it. We love predictions, not because we want to be right or wrong, but really it catalyzes conversation as to what may happen in the next 12 months. The same person who loves predictions loves quizzes. I'll give you that as a little hint. Mike? Yeah, Mike. That's it. On that note, we'll say farewell. As you know, we're the podcast that never sleeps, the only podcast in the world that goes straight through the break and through Christmas. Thank you, idea, for jumping on in the middle of your holiday. We will be back, of course, on Saturday for our Ask Us Anything episode and then back again, as always, Tuesday for our big episode with predictions next week.

1:39:35We'll see everybody soon. Have a great New Year's. As you know, I don't celebrate New Year's, but have a great New Year's and I'm sure you'll have a fantastic time, idea, whatever you do. Happy New Year to everyone. Thank you.

1:39:51Thank you.